Management Chapter 4 1 Teaching Note Blowout The Aftermath The Gulf Oil Disaster This Case Illustrates

TEACHING NOTE

BP Blowout: The Aftermath of the Gulf Oil Disaster

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This case illustrates the following themes and concepts discussed in the chapters listed:

Theme/Concept Chapter

Stakeholder analysis 1

Government regulation 7

Sustainable development 10

Managing for sustainability 11

Crisis management 19

Case Synopsis

This case, written especially for this edition by Daniel Jacobs, author BP Blowout: Inside the Gulf

Oil Disaster (Washington, D.C.: Brookings Institution Press, 2016), describes the aftermath of the

2010 blowout of BP’s Deepwater Horizon well in the Gulf of Mexico. The blowout resulted in the

death of eleven people and the discharge of more than three million barrels of oil and was the most

TEACHING TIP: WHERE TO USE THE CASE IN THE COURSE

This case is integrative, in that it draws on many themes of the text. It may be used at the end of the

TEACHING TIP: VIDEOS

Several videos may be used in conjunction with this case.

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Deepwater Horizon and may be shown at the beginning of the class session to focus student attention

Discussion Questions and Answers

1) What stakeholders were impacted by BP’s actions, and how were they impacted?

One way to approach this question is to form students into six teams, with each team responsible for

answering this question for one stakeholder, filling in a form that can later be collected by the

instructor. Students should be able to complete this task quickly (in 5 to 10 minutes). Each team can

The case discusses the impact of BP’s actions on these stakeholders:

Local businesses

• Commercial fishing: the U.S. government closed large areas of water to fishing, shutting

down more than a third of Gulf waters after the spill.

• Tourism: tourists cancelled their trips to the region, not just to beach areas that had been

Local governments

Community residents

• Loss of jobs and related psychological impacts.

Employees of BP (including its contractors and rescue and clean-up workers)

• 11 workers on the Deepwater Horizon died, and 115 were injured or traumatized.

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chemical dispersants. These effects included high blood pressure, fluctuating blood sugar,

and breathing and intestinal problems. Cleanup workers were also at greater risk for

depression and anxiety.

TEACHING TIP: ENVIRONMENTAL JUSTICE

Shareholders

The case estimates the total cost of the disaster to BP at $66 billion—more than any company has

ever paid for a disaster of its making. Much of this cost was borne by the company’s shareholders in

Taxpayers (public)

Because some of BP’s costs (but not its criminal and civil penalties) were deductible, the American

taxpayer subsided part of the cost. The company estimated it would save around $56 billion over

time, because of these deductions.

TEACHING TIP: TAKEAWAY

The instructor may wish to introduce the next question by asking: Why didn’t we include “the

environment” or “ecosystems” as a stakeholder in the exercise we just completed? Can the

environment be considered a stakeholder? Chapter 1 defines a stakeholder as “persons and groups

2) What were the environmental costs of the disaster, and how can these be measured?

The case reports that the disaster “took a terrible toll on the environment.” Impacts discussed in the

cases include:

• Beaches and wetlands were contaminated with oil and dispersants.

TEACHING TIP: TAKEAWAY

3) Do you think that the legal consequences faced by BP, its employees, and the false

claimants were appropriate, and why or why not?

The legal consequences to BP were costly.

• The company pled guilty to manslaughter and other charges to resolve the criminal case,

• The federal government also prosecuted hundreds of individuals for filing false claims

against BP. One hundred and nine people received prison sentences for filing fraudulent

4) Do you think it is a company’s responsibility to prevent a disaster of this type or the

government’s (or both)? Why?

5) Describe changes in the U.S. regulation of deepwater drilling since the disaster. What

approach to regulation do you support, and why?

6) What lessons should the oil industry, business in general, government, and civil society

draw from this case?